ISLAMABAD: Prime Minister Nawaz Sharif has directed the initiation of a probe into the conduct of power distribution companies that are alleged to have provided unauthenticated figures of improvement in line losses and recovery of electricity bills.
The instruction came in the backdrop of swelling circular debt and prolonged power outages that called the performance of power distributors into question.
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Talking to The Express Tribune, a senior official of the Ministry of Water and Power said secretary to the prime minister cast doubt about the data of line losses and bill recoveries in a high-level meeting on April 10, chaired by the premier.
The secretary suggested that a third party should be hired for verification of the claims made by the Ministry of Water and Power and distribution companies about substantial improvement in line losses and bill recoveries.
In that regard, he pointed to frequent reports of accounting and billing malpractices by the distribution companies for painting a rosy picture on both accounts.
Consequently, the premier directed the Ministry of Water and Power to get the figures checked by a third party.
The water and power secretary told the meeting that average bill recoveries in previous years had been in the range of 88% to 90% whereas line losses stood around 19%.
However, he said, the distribution companies fared better in 2015 and 2016 with higher recoveries at over 93% and lower line losses at 16.30%.
These improvements coupled with lower crude oil prices restricted the growth of circular debt. Without the improvements, the debt would have topped Rs684 billion, he said.
He blamed the National Electric Power Regulatory Authority (Nepra) for the growing circular debt. Owing to the difference between Nepra’s assumption of 100% bill recoveries and average 15.3% line losses and actual recoveries and losses, the circular debt had surged from Rs320 billion in October 2014 to Rs374 billion in December 2016, he said.
The secretary held the Ministry of Finance responsible for liquidity crunch in the energy chain and said it did not tighten the noose around inefficient power companies that failed to curb power theft.
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However, he did not reveal how much money was generated by imposing tariff rationalisation and financial cost surcharges on power consumers to deny them the full impact of weak crude oil prices.
Some officials suggest the government is generating Rs200 billion every year through the surcharges. With the help of these, the distribution companies were showing higher recoveries.
Published in The Express Tribune, April 22nd, 2017.
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